Being a former member of Denmark, Iceland used the Danish Rigsdaler and then the Danish Krone. In 1885, the country began issuing its own banknotes. Under Danish rule, Iceland was connected to the Scandinavian Monetary Union until 1914 when the monetary union disbanded. In 1918, Iceland gained autonomy from Denmark and the Icelandic Króna was established as the country's official currency. This first Krona suffered hyperinflation and in 1981, a reform took place to revalue the currency by a factor of 100. New notes and coins were issued and the ISO currency code was changed from ISJ to ISK.

Iceland's 2008 Financial Crisis
In 2008, the country suffered a financial crisis where the banking sector collapsed. The value of the Krona plummeted. Although the Central Bank tried to stabilize it by pegging it against the euro, the Krona continued to fall. Since then, there has been debate as to whether or not Iceland should adopt a more stable currency. The euro and the Canadian Dollar have been favored, though opinions are still mixed.